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Report: Industrial Looks Like a Smart Play in the Current Environment

As national stay-at-home orders have shifted much of the economy toward a delivery model, the negative implications have been broadly felt, extending in the commercial real estate arena. However, Marcus & Millichap says industrial appears to be an exception to the rule.

“Offices, restaurants, hotels and most other retailers have been forced to close their doors to avoid overwhelming the nation’s healthcare system,” according to a special report prepared by the firm’s Stephen Hovland and Kevin Carreon. “Apartment operations could suffer if employment fails to rebound quickly.

“Warehouse and distribution centers, however, are in a relatively favorable position as much-needed supplies are funneled through a smaller supply chain,” they continue. “As a result, these properties are expected to weather the health crisis better than most others regardless of the length of the downturn.”

From an investment perspective, “the structural soundness of the economy failed to warrant significant diversification away from equity markets or specific investment real estate” in the early days of the pandemic, write Hovland and Carreon. “As a result, some well-capitalized buyers may consider shifting into more in-demand industrial assets, such as warehouses and distribution centers.”

Pictured: A single-tenant property within the Freeport Center in Phoenix traded last month, reportedly to KKR.

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About Paul Bubny

Paul Bubny serves as Senior Content Director for Connect Commercial Real Estate, a role to which he brings 13-plus years’ experience covering the commercial real estate industry and 30-plus years in business-to-business journalism. In this capacity, he oversees daily operations while also reporting on both local/regional markets and national trends, covering individual transactions across all property types, as well as delving into broader subject matter. He produces 15-20 daily news stories per day and works with the Connect team and clients to develop longer-form content, ranging from Q&As to thought-leadership pieces. Prior to joining Connect, Paul was Managing Editor for both Real Estate Forum and at American Lawyer Media, where he oversaw operations at both publications while also producing daily news and feature-length articles. His tenure in B2B publishing stretches back into the print era, and he has served as Editor in Chief on four national trade publications. Since 1999, Paul has volunteered as the newsletter editor of passenger rail advocacy groups (one national, one local).

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